Dividends4Life: Buffett's Biggest Mistake

Buffett's Biggest Mistake

Posted by D4L | Sunday, October 24, 2010 | | 0 comments »

What is Warren Buffett's biggest investing mistake to date? We no longer need to guess at the answer. In an interview that aired yesterday on CNBC, the CEO of Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) said "the dumbest stock" he ever bought was ... Berkshire Hathaway. On the scale of mistakes, this was a beaut – Buffett estimates the opportunity cost of the investment at roughly $200 billion.

A $200 billion blunder for want of an eighth of a dollar. Here's the background: In 1964, Buffett was ready to tender shares he had accumulated in a small textile company -- Berkshire Hathaway -- back to the company. He met with the CEO and they agreed a price of $11.50 a share. Back in Omaha, Buffett received the official tender offer... at a price of $11 3/8! In Buffett's words, "He chiseled me for an eighth." Furious, Buffett refused to tender his shares. In a ruthless and vindictive response, Buffett instead accumulated more shares, eventually taking control of the company -- and firing the CEO.

Source: Motley Fool

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